For customers, opening an investment account with a financial institution using an intermediary investment advisor has typically been a paper-based process. For example, the advisor must manually complete the financial institution account paperwork and his own customer agreement paperwork, sign, and mail the completed paperwork to the customer. The customer then reviews the paperwork, completes the necessary forms, and returns the packet of documents to the advisor. This process is often susceptible to errors due to manual completion of the forms, and to time delays in preparing, mailing, and receiving the paper forms.
Recently, certain financial institutions have begun enabling advisors to provide account opening documents to customers using an electronic approach. For example, the advisor can prepare digital versions of the financial institution account paperwork using, e.g., a web portal provided by the financial institution, and electronically deliver the paperwork to the customer for review (e.g., email, web portal access). However, due to regulatory and privacy constraints, financial institutions typically do not allow advisors to provide their own customer agreement forms electronically to customers using the same electronic mechanism as the financial institution documents. For example, the financial institution may not be able to store any sensitive information in the advisor agreement documents due to regulatory compliance concerns.
As a result, the account opening process is bifurcated—meaning that the advisor will electronically prepare and sign the financial institution account paperwork for delivery to the customer electronically, but still prepare his own agreement paperwork on paper and mail it to the customer. This process is similarly susceptible to errors and delay as described above, and also leads to advisors being less inclined to offer products from a financial institution that only supports the bifurcated model.